Contactless payments have existed in the UK since 2007, but consumers were slow to adopt the technology for a long time, with only 28% using contactless cards in early 2015. More recently, contactless adoption has accelerated, with 63% making a contactless payment in early 2017. Despite this rapid adoption in recent years, contactless usage in the UK still trails behind its global peers such as Australia, New Zealand, and Canada, where contactless payments have reached near ubiquity. So, the question becomes, when will contactless usage reach a similar level in the UK? As RFi Group has been closely watching the contactless journey in a number of markets for several years, we now have an excellent database to track contactless adoption patterns and forecast where the trends are going. As such, this report will take a look at contactless adoption in the UK, as well as other comparable markets, in order to estimate when contactless in the UK will reach ubiquity.
When RFi Group UK contactless adoption data is overlaid on the equivalent Australian data, it can clearly be seen that the adoption curve in the UK closely mirrors that seen in Australia.
RFi Group data shows that contactless adoption in the UK has followed a very similar pattern to that seen in Australia, just a few years behind. Contactless card usage in Australia was also slow to take off, with only 44% using the tool in late 2013, but this increased to 64% in early 2015, before eventually stabilising at around 70% in mid-2015. When RFi Group UK contactless adoption data is overlaid on the equivalent Australian data, it can clearly be seen that the adoption curve in the UK closely mirrors that seen in Australia (figure 1). When RFi Group first looked at this data in the first half of 2016, it led to a prediction that contactless in the UK would reach ubiquity, at around 70%, by the end of 2017. So far, this prediction has played out, with adoption rates in the first half of 2017 in line with that predicted. If current trends continue, as RFi Group expects, we should see the UK reaching near ubiquity in contactless usage in late 2017, up 18% from the figures seen in the second half of 2016.
(Figure 1) Source: RFi Group UK Payment and Innovation Council
The trend towards contactless payments in the UK has been largely driven by younger consumers, as well as those living in London, with these groups also likely to drive the push towards contactless ubiquity. RFi Group Payments and Innovation Council data shows that 69% of those aged under 35, and 68% in London, use contactless, up 15% and 5% respectively in the last 12 months, compared to 60% of over 35s and 62% in the rest of the UK, demonstrating the key role these groups are playing in the move towards contactless payments. One of the key drivers of their contactless usage appears to be the view that contactless payments are quick and easy, with around 75% of those under 35 stating this as their reasoning for usage. In London, it is also likely that the ability to use a contactless card on the transport system is driving this behaviour.
The final piece of the puzzle is what exactly card issuers can do to help contactless cards make the final push towards ubiquity. Taking steps to improve consumer trust in contactless payments are essential, with 1 in 3 agreeing that they lack understanding of contactless payments and are reluctant to trust the technology. A further 33% are concerned that contactless technology will not reliably process transactions, hinting at consumers’ distrust in the technology. Continuing efforts to educate consumers on the use and benefits of contactless, as well as the security features, is likely to help build trust. Alternatively, card issuers could look to offer rewards for using contactless payments, with 49% agreeing that rewards would help incentivise their contactless card usage, with this proportion increasing among those under 35 to 60%.
Card issuers could look to offer rewards for using contactless payments, with 49% agreeing that rewards would help incentivise their contactless card usage.
As can be seen from RFi Group’s data, based on current adoption rates, the UK is following a similar contactless adoption pattern to Australia. As such, it appears likely that contactless payments will reach ubiquity in late 2017, although this may prove to be faster if banks and financial institutions can act to help reduce some of the barriers to adoption, such as increasing knowledge surrounding security of contactless payments to help alleviate trust concerns or offering rewards to further encourage contactless adoption, particularly among younger segments. Moving forward, RFi Group will continue to monitor contactless adoption, as well as other emerging payment solutions around the world, such as mobile wallets, to ensure we keep on top of the exciting payments industry and make predictions for the future.